Stimulus cash a building block for state

Matthew Kaplan

Wednesday

Dec 30, 2009 at 12:01 AMDec 30, 2009 at 6:40 PM

Bad economic news has become the norm, from record state deficits to soaring unemployment. But the numbers have been especially bad for the construction industry, which lost some 2 million jobs nationwide over the past two years.

Bad economic news has become the norm, from record state deficits to soaring unemployment. But the numbers have been especially bad for the construction industry, which lost some 2 million jobs nationwide over the past two years.

Massachusetts construction workers have fared far worse; unemployment estimates for the industry hover around 25 percent compared to the national rate of 18 percent. The industry lost around 22,000 jobs statewide over the past year falling from a peak of 143,600 jobs in April 2006 to 108,400 jobs in October.

Gov. Deval Patrick and other state politicians have been increasingly looking to construction work as a way to boost unemployment and the state economy.

About $503 million of the $4 billion in stimulus money the state has received has gone to infrastructure projects. Jeffrey Simon, director of the Massachusetts Reinvestment and Recovery Office, said the state plans on committing all of its $437 million in stimulus highway funds by January.

But the results are less spectacular. Simon estimated that, as of this month, federal stimulus funds have helped retain some 1,450 construction jobs and created about 410 new jobs in that category.

Despite the modest numbers, the Patrick administration and others still hope that by spending federal stimulus funds on projects such as the state's deteriorating roads and bridges the construction jobs will come back.

"It's very much needed to stimulate the economy," said Susan Moir, director of UMass-Boston's labor resource center.

Although construction jobs make up less than 4 percent of non-farming employment statewide, state officials are banking on the so-called multiplier effect construction jobs have on the local economy.

According to the Associated General Contractors of America, $1 billion spent on construction in Massachusetts would have a $2.2 billion effect on the economy. While $1 billion would create some 5,800 construction jobs, the multiplier effect would mean a total of about 17,000 jobs.

Simon also hawks the multiplier effect of the state strategy.

"When you build a building, it's not just the construction workers who work on that building. It's all the suppliers. It's all the service providers," he said.

Banking on this multiplier effect, Patrick has heavily invested in infrastructure and construction jobs. The administration is in the second year of a three-year commitment to improving failing bridges statewide. Thus far, the Patrick administration has pledged around $5 billion for its Accelerated Bridge Program.

Simon said Patrick is committed to striking a balance between short and long-term construction projects, specifically citing the transportation work at the Assembly Square site in Somerville, which the state hopes will create new businesses and new jobs.

"The goal is to be able to invest the money we have in projects that will begin to build the rebound," Simon said.

He also said the state plans on using federal funds to create construction jobs with water and sewage plant update projects along with jobs to weatherize low-income housing. According to the state Reinvestment and Recovery Office, Massachusetts has received $122 million in federal stimulus money to insulate 17,000 homes, creating about 80 construction-related jobs.

Construction jobs offer other benefits to the economy. Moir said construction workers make between $70,000 and $80,000 annually in good times, which means more consumer spending.

But the construction industry is far from good times. John Pourbaix, executive director of industry trade group Construction Industries of Massachusetts, said the outlook remains bleak. Outside public sector jobs, hardly any construction work exists, he said.

"Right now, the only game in town is really public works," Pourbaix said. "What we have found, the private side, the commercial, the institutional side is all but dried up."

Although Pourbaix estimated construction unemployment at around 25 percent, he believes some sectors within the industry are closer to 50 percent unemployment. For example, the specialty trade sector, which includes plumbers and electricians, lost about 15,000 jobs since last October.

"If you're a plumber, there isn't a heck of a lot of work in the highway side of things," Pourbaix said.

Despite the onus put on infrastructure and construction jobs, the industry and the state economy have yet to see the benefits materialize. By one congressional estimate, Massachusetts is next to last in spending its stimulus funds.

Additionally, some have criticized the administration's plans as the wrong approach to job creation. David Tuerck, executive director of Suffolk University's Beacon Hill Institute, said that although he sees the economic benefit of infrastructure projects, he does not think Patrick should try to create jobs simply by spending, because doing so ignores the ultimate costs such programs will have on the federal deficit.

Eventually, Tuerck said, taxpayers will have to pay off the debt and deficit accumulating from stimulus efforts. He said the administration should create jobs by changing labor laws to allow for lower, more competitive wages in the industry - an effort guaranteed to raise union complaints.

"There is no free lunch here," Tuerck said. "Yeah, we can create some additional jobs by having the federal government go out and spend money on stuff, but the money has to come from somewhere, and how that money is raised will have consequences for the economy."

Still, administration and industry officials remain optimistic that, given time, Patrick's focus on construction jobs will have a positive impact on the economy.

Pourbaix said the construction industry should take off again in April, as the weather becomes warmer and as more stimulus-funded projects get under way. Simon said the Accelerated Bridge Program will hit its funding peak next year.

"This problem wasn't created in a month or two and it's not going to get solved in a month or two," Simon said. "Our entire goal in the first instance is to slow the rate of job loss and then to turn the ship around so that we have positive job gains, and that's really where the governor is going on all this."

MetroWest Daily News contributor Matthew Kaplan is a reporter in the Boston University State House Program.